5 project-based pricing best practices
Let’s dive into each of the best practices we covered in video, as well as a few more, so you can hit the ground running with project-based pricing. You’ll learn how to:
- Define your project scope
- Create a clear contract
- Build a risk management plan
- Curate project packages
- Know when to scale
Define your project scope
Project management is a must when it comes to project-based pricing, and this all starts by defining a clear scope of work to be done. You must work with your client to identify the scope of the project and then stick to this plan in order to keep your budget and schedule on track.
During the sales process with a new client, it is imperative that you conduct a discovery call. A discovery call is a meeting, or series of meetings, designed to gain insight into a prospects business problem, desired solution, and constraints). By the end of discovery, you will have a clear understanding of the scope of the engagement before you start the project.
To maximize efficiency, you can pre-qualify leads by sending a form that asks them specific questions around their team’s budget, authority, need, and time (BANT). Here are some examples of questions you may ask via this form or directly in your discovery call:
- Budget: What is your budget? How much have you invested in solutions in the past that haven’t driven as strong results?
- Authority: Who is involved in the decision-making process, and who on your team will we connect with if we work together?
- Need: What are your main priorities? What are your biggest challenges?
- Time: What are you hoping to accomplish in the next X months? Are there important dates coming up for your business?
Create a clear contract
Your contract is key. This documents your project scope, the actual deliverables you will create, and how and when your client will pay for each. This is absolutely critical for you to ensure you get paid adequately for your hard work and produce a successful outcome for your client.
Note: To stay on track with a project, you may choose to invest in a project management solution (e.g., Asana, Monday, etc.) that aligns with the plan above, mapping out key deliverables and milestones to keep your team on track throughout the project and automating key messages to your team and clients.
Here are some key items to include in your project contracts, along with examples of each one:
- Deliverables
Tangible end-products your team creates for the client (e.g., Klaviyo account set-up, number of campaigns or flows, etc.). - Milestones
Timeline for when each deliverable will be finished (e.g., set up Klaviyo account within 14 days of project launch; build 5 email templates by end of month). - Ownership
Identify who owns each task in your project scope (e.g., your team member owns designing emails while a stakeholder at your client’s company approves each design within 14 days of submission). - Payment terms
Includes the project cost, payment schedule, how payments are accepted, what happens when they're not received, and how additional costs are handled. - Communication
How you intend to communicate between teams (e.g., via email, slack, meetings, phone calls, a combination, etc.). - Cancellation terms
In the event that a project must be canceled, detail who can cancel a project and how (written document, verbal cancelation, etc.).
Build a risk management plan
A risk management plan is a document that details how your team plans to identify and manage risks if they arise throughout your project.
For each risk, delegate an owner to handle the situation and detail steps to mitigate the impact.
Best practices:
- Log every potential risk, their likelihood, and how high or low of an impact it will be.
- Add a contingency to your contract around timing, with any charge if you go over the anticipated amount of time caused by the client.
- Consider potential added costs that your team may have to absorb should they arise and what you will do if this is the case.
To help you track your risks, use our risk log spreadsheet. In this resource, you can make a copy, log your risks, and the tracker will populate a risk “score” to help you identify your highest risks over time.
Curate project packages
As you work on similar projects over and over again, you can streamline your planning process by offering pre-built project packages. Clearly define and document these packages. In particular, include what services are included, and even more importantly, what are not. Then, once you have packages ready to offer, you can easily create contracts that include one or multiple packages.
For example, an agency may set up the following Klaviyo set-up packages:
- Account set-up: simple account set-up and onboarding training; includes: the creation of 1 sign-up form and 3 core flows (welcome, abandoned cart, and browse abandonment) in addition to set-up.
- Email starter pack: set-up package that includes all of the offerings of the above, plus 5 core email templates and a 90-day content calendar that supports deliverability warming.
- Omnichannel set-up: complete account set-up package that includes all of the offerings of the email starter pack, but also includes setting up Klaviyo Reviews and SMS (including 4 initial texts in the first 60 days).
To assist you in this process, use our Packaging Workbook. You can also watch a video walkthrough of the workbook in our course, Price your agency services.
Know when to scale
As you grow with a project-based pricing model, you may find yourself in a situation where you either need to raise prices or pivot in order to scale.
Why? Project-based pricing is great for projects with a clear scope and end-date (e.g., account set-up, building a website, launching a new program and off-boarding to the client’s team). However, it is less effective when it comes to retaining a client long-term, after the project wraps.
As a result, you may pivot to (or weave into your strategy) a retainer-based pricing model. A retainer creates long-term partnerships between your agency and a client; in this kind of contract, the client agrees to work with your team for a set length of time (e.g., 18 months), and pays an ongoing fee across that timeframe for a set of services that you agree upon to maintain their account and marketing strategy long-term.
Want to see if this strategy is for you? Learn best practices for retainer-based pricing.
If you determine a price increase is the best way for you to scale at this time, learn best practices for communicating a price increase from Indeed.